Legal Question in Business Law in New York
Buying Aged Corporations with history (not shelf)
I am about to launch a product/service I've worked on for awhile. Was going to do so with new corp and use my personal credit to back it as my scores are perfect, old, and high.
I have been offered various forms of aged corps, some shelf, but some are aged corps with existing histories; Bank Account, Credit-Line, and Tax Returns for a few years.
Assuming that due diligence shows no outstanding debts/liens/claims and that the Credit Lines are for the business, not PG'd by the owners, may I *legally* access these lines once I am the new owner?
Furthermore, may I apply for credit and use the tax-returns/age if/whebn asked for financials? Obviously if I go for high LOCs and they want Business Plan/forecasts I will use my own, however would it be legal to access the credit lines and/or apply for Credit-Cards/Loans as the new owner of a corp with history/credit/returns?
I have no problem PGing any of these, have a real product/business/projections so am not looking to scam, vacation in Italy, etc., just trying to get a leg up on Credit Lines so I can launch effectively.
2 Answers from Attorneys
Re: Buying Aged Corporations with history (not shelf)
Q. may I *legally* access these lines once I am the new owner?
A. If purchase of the corporation is through a stock transfer, and credit lines belong to the corporation, in a perfect world you should be able to use the credit lines. However, most loan agreements have language concerning operation and ownership of the corporation. So, you would have to read the language in the LOC agreement.
Q. Furthermore, may I apply for credit and use the tax-returns/age if/whebn asked for financials?
A. If the bank asks for tax returns of the corporation that you own, there is nothing wrong to produce those returns.
Two final item you did not think of. First, most LOC require a personal guarantee. The individual selling you the corporation probably does not want to guarantee a corporation when they do not have ownership or control.
Second, most attorneys frown upon a stock transfer since you would continue to be responsible for unknown liabilities.
Mike.
Re: Buying Aged Corporations with history (not shelf)
There are substantial risks inherent in such a transaction, not the least of them being that the existing corporation may have undiscovered liabilities which come back to haunt you.
Unless the seller not only is willing to but has the assets to hold you harmless against such potential liabilities, you'd be better off starting fresh.
Related Questions & Answers
-
Cashing a check received for disupted compensation I am in dispute with a company... Asked 12/03/08, 1:23 pm in United States New York Business Law
-
What kind of lawyer do I need? Thank you for the advice I was given on my legal... Asked 12/02/08, 11:04 am in United States New York Business Law
-
Sub-contractor needs legal advice My husband was hired as a subcontractor, by... Asked 12/02/08, 10:30 am in United States New York Business Law
-
Business I am 50% share holder in a LLC .i have 2 other partner 25% each my friend... Asked 11/30/08, 5:05 pm in United States New York Business Law
-
Debt collection from a minor collecting a debt from a minor child Asked 11/27/08, 7:55 pm in United States New York Business Law
Looking for something else?
10,200 active attorneys ready to answer your legal questions today.
Featured Attorneys
Earn additional revenue and grow your business.
